I use ffmpeg in order to convert a file from avi to mp4 format.[1. http://www.ipodtouchfans.com/forums/showthread.php?t=42996] In my case, I use cygwin in Windows PC and svn for download the ffmpeg, and compile it.

Once ffmpeg is installed, you can do like following to convert a file from avi to mp4 (H.264).

ffmpeg -i a.avi a.mp4